Biggs Corp. v. Wilen, No. CV-N-99-0645-ECR-VPC.
| Decision Date | 09 May 2000 |
| Docket Number | No. CV-N-99-0645-ECR-VPC. |
| Citation | 97 F.Supp.2d 1040 |
| Parties | BIGGS CORPORATION, Plaintiff, v. Joseph M. WILEN, Wilen Companies Incorporated, Katy Industries, Inc., Brady Industries, Inc., and John Does, Defendants. |
| Court | U.S. District Court — District of Nevada |
Joseph C. Smith, Jr., Smith & Harmer, Ltd., Carson City, NV, for Plaintiff.
Gregory A. Brower, Jones Vargas, Reno, NV, for Katy Industries.
Michael D. Rounds, Skinner Sutton Watson & Rounds, Reno, NV, for Wilen Cos. and Joseph M. Wilen.
Marcia M. Ernst, Smith, Gambrell & Russell, Atlanta, GA, for Joseph M. Wilen & Wilen Companies.
A. Bryce Dixon, D. Shane Clifford, Dixon, Truman & Kelleher, Las Vegas, NV, for Brady Industries.
This case concerns the development of unique handles for mops, known as Ergonomic Mop Handles, which the plaintiff developed and alleges defendants stole through fraud. The Court now considers two related motions by plaintiff. The first is plaintiff's motion to remand (# 16) filed on December 28, 1999. Defendant Brady filed an opposition (# 21) on January 13, 2000 and Defendant Katy filed an opposition (# 23) on January 14, 2000. The plaintiff replied (# 25) to Defendant Brady's opposition on January 24, 2000 and replied (# 29) to Defendant Katy's opposition on January 31, 2000. The second motion by plaintiff (# 44) is a motion to strike the supplemental notice of removal filed by defendants on February 11, 2000. The defendants filed an opposition (# 48) to the plaintiff's motion to strike. The plaintiff replied (# 50) on March 30, 2000.
The plaintiff filed a complaint in state court on September 24, 1999. The dispute concerns plaintiff's development of a new type of mop handle that is more useful. The plaintiff began marketing the handles as Ergonomic Mop Handles. On April 21, 1998 defendant Joseph Wilen ("Wilen") contacted plaintiff regarding his mop handles. The plaintiff states that Wilen represented to plaintiff that Wilen Industries was interested in purchasing plaintiff's mop handles and that Wilen requested information on plaintiff's mop handles. The plaintiff alleges that he provided Wilen with information on plaintiff's method of doing business, the advantages and benefits of plaintiff's mop handles, plaintiff's advertising strategy, and the manufacturing details of the mop handles. The plaintiff states that Defendant Wilen on several occasions represented that Wilen Industries was interested in purchasing plaintiff's mop handles and also represented to plaintiff that if he obtained a patent on his mop handle, Wilen Industries would take a license from plaintiff and pay royalties. The plaintiff claims that he believed the representations.
The complaint alleges that soon after these conversations, Defendant Wilen Industries obtained several of plaintiff's mop handles and presented them to plaintiff's potential customers as a product belonging to Wilen and Katy Industries in order to test the market. (Complaint, p. 4, 11.4-5) When the results of the test proved positive, the plaintiff claims that defendants began producing a mop handle, literature advertising and trade names which were all virtually identical to the details of plaintiff's Ergonomic Mop Handle. The defendants called their product the "Icky Stick." Around October 1998, Defendants Wilen presented their "Icky Stick" in Las Vegas to potential customers. Plaintiff alleges that defendants represented that the "Icky Stick" was their original invention. The plaintiff claims that as a result of defendants' promotion in Las Vegas, many of plaintiff's potential and existing customers and distributors have ceased doing business with plaintiff and have become "Icky Stick" distributors, customers, and users. (Complaint, p. 4, 11.25-27)
Once plaintiff learned of the defendants' actions it contacted the defendants. Plaintiff alleges that Defendant Wilen then represented to plaintiff that if plaintiff obtained a patent upon plaintiff's mop handle, the defendants would honor the patent and would also obtain a license from plaintiff. (Complaint, p. 5, 11.6-10) In July 1999, plaintiff was issued a patent covering plaintiff's Ergonomic Mop Handle. On July 30, 1999, the plaintiff contacted defendants Wilen to notify them of the patent and to request that they enter into a licensing agreement with plaintiff. The parties did not enter into an agreement.
Plaintiff then filed suit alleging that defendants' representations were made with the intent to induce the plaintiff to share his information so that defendants could appropriate and use such information as their own. (Plaintiff's Complaint, p. 3) The complaint alleges that defendants fraudulently induced plaintiff to reveal this information. It also alleges that defendants interfered with plaintiff's sales by inducing plaintiff's potential and actual distributors to deal with defendants.
The plaintiff filed its complaint on September 24, 1999 in the Second Judicial District Court of the State of Nevada, naming Katy Industries ("Katy"), Wilen Companies Incorporated ("Wilen Companies"), Joseph Wilen ("Wilen"), Brady Industries ("Brady") and John Does 1 through 10,000 as defendants. Plaintiff's attorney sent a filed copy of the summons and complaint to Defendant Wilen's attorney, Steven Kerr.1 Defendant Brady Industries acknowledged service of the summons and complaint on September 28, 1999. However, plaintiff did not file a return of service notice with the state court. Katy Industries was not served until November 16, 1999. Katy filed a notice of removal on December 2nd, 1999 alleging that the case was removable on federal question grounds. Defendants Wilen Companies and Wilen joined in the first notice of removal.2 The December 2nd notice mistakenly stated that Defendant Brady had not been served. Once Katy discovered that Brady had been served, an amended notice of removal on federal question grounds was filed on December 15, 1999, in which all named defendants joined.
On December 21, 1999 Defendant Brady filed a motion (# 13) to dismiss on the grounds that it had been fraudulently joined in the action solely to destroy diversity. On December 28, 1999 the plaintiff filed a motion to remand (# 16) the case to state court on the grounds that defendants did not timely file their notice of removal with this court and that defendants did not properly include all defendants in the notice. The plaintiff argued that the firstserved defendant rule applies and that the 30-day time period for removal under section 1446(b) began to run when Brady was served. The defendants opposed the motion to remand on the grounds that the first-served defendant rule should not be followed and that Defendant Brady has been fraudulently joined. Defendant Katy acknowledged in its opposition to the motion to remand, that the case was also removable on diversity grounds because Defendant Brady was fraudulently joined but that the defendants had not removed on diversity grounds because they could not yet determine if the $75,000 jurisdictional minimum could be met. (Katy's Oppo., p. 3, fn.2).
On February 11, 2000, however, defendants filed a supplemental notice of removal on diversity grounds. The defendants allege that they received recent information that allowed them to determine that the $75,000 jurisdictional minimum could be met. The defendants rely on a demand letter dated January 12, 2000 as the new evidence that triggered their awareness that the jurisdictional minimum could be established. The plaintiff filed a motion to strike the supplemental notice of removal alleging that the demand letter was an inadmissible offer to settle or compromise. In addition, the plaintiff alleges that the defendants were aware, long before the demand letter, that the amount in controversy exceeded $75,0000.
Removal is governed by 28 U.S.C. § 1446(b) which provides:
The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
The plaintiff argues that because it served the first defendant, Wilen, on September 24, 1999, the time for removal expired on October 24, 1999, making it impossible for later-served defendants to remove the case to federal court. Alternatively, the plaintiff argues that Defendant Brady Industries acknowledged service of the summons and complaint on September 28, 1999 and therefore, the time for removal expired on October 28, 1999. The defendants notice of removal was not filed until December 15, 1999, more than 30 days after defendants Wilen and Brady were served.
The question before us is whether the 30-day time period in section 1446(b) bars defendant Brady from joining in a removal notice filed by later-served defendant Katy. The removal statutes do not expressly address the problem of multiple defendants. The Ninth Circuit has not addressed this issue. See Griffith v. American Home Products Corp., 85 F.Supp.2d 995, 999 (E.D.Wash.2000) (). In addition, the district courts in the Circuit have split on the issue. See, e.g., Samura v. Kaiser Found. Health Plan, Inc., 715 F.Supp. 970, 971 (N.D.Cal.1989) (), with Ford v. New United Motors Mfg., Inc., 857 F.Supp. 707, 708-10 (N.D.Cal.1994) ().
This court briefly discussed the issue of timeliness of removal several years ago in Pic-Mount Corp. v. Stoffel Seals Corp., 708 F.Supp. 1113, 1114 (D.Nev.1989). In Pic-Mount we...
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